A million dollar no exam term life insurance policy would offer an affordable way to ensure more than adequate coverage for your loved in the event of your untimely death.
While it seems like an exorbitant amount of money, it is reasonable given today’s economy. A no exam policy may mean no physical is necessary, but there may be other requirements you need to know about. There’s no such thing as a free lunch, especially with a million bucks on the line from the insurance company.
First, What Is Term Life Insurance?
It is more typical to go with a longer term since you will have a level rate for the duration of the policy. Insurance prices, like everything else, goes up. When it comes to renewing, you may have to pay a higher premium or comply with new conditions.
The advantage of term life insurance is its affordability. Unlike permanent life insurance, there is no cash value portion. The amount you pay is just for the cost of the insurance. With whole life, for example, you’d be paying into what is operates like a tax-deferred IRA. Term life is an excellent option on its own or as a supplement to other permanent insurance you may have.
These policies auto-renew usually. Even though it has a term, you can typically carry insurance until you are age 90 or even older. You must keep your insurance current. Otherwise, an insurance company can cancel your policy. And you’ll have to go through the application process all over again. This information will also go into your Medical Information Board (MIB) record.
Is A Million Dollar No Exam Term Life Insurance Policy Enough?
You may wonder about the $1 million amount.
To put it in perspective, let’s consider some statistics beginning with the average home cost. According to the US Census Bureau, it is $377,800. The median U.S. income is $54,417. These figures may have you questioning whether $1 million is indeed enough coverage after all.
How Much Coverage Do You [Really] Need?
When deciding how much coverage you need, you should begin with the amount of annual income your spouse and family will continue to live in the present lifestyle. You should also consider other expenses such as your mortgage and education cost for your children. As a general guideline, you should plan on getting coverage is equal to 7 to 10 times your income.
Based on the median income here in the states, you’re looking at a figure of $380,919 to $544,170 on the high side based on income alone. This doesn’t take into account any other expenses your family may incur at your passing. Taking everything into account, $1 million seems to fall in line with current US Census Bureau data.
More On No Exam Life Insurance
No exam life insurance is just what it says; you can forgo the physical is often a requirement for a fully underwritten life insurance policy. That will mean you won’t have to deal with the hassles of blood work and other tests to assess your life expectancy and insurance risk. However, an insurance company isn’t likely to take a chance on coverage without data.
Often with a policy with so much coverage, you’ll have to jump through the hoops to get accepted. In addition to a medical examination, it may include other health assessments such as an EKG and a treadmill stress test. They may require a battery of tests including ones your doctor may not typically order such as a GGT for alcohol use.
An underwriter may request other information in lieu of a medical exam. In these days of electronic medical records, it’s easier for your primary care physician to share your health history. That can include information such as your prescription history which can certainly provide enough evidence of a pre-existing condition.
Some insurance companies may want proof you’ve taken care of yourself with routine physical exams. The medical history may even extend to your parents and siblings. Some insurers might decline coverage if a family member had heart disease or diabetes before age 60. The same condition may apply to certain cancers such as breast or colon cancer.
With million dollar no exam term life insurance, your insurance company may have an interest in your credit record or history of bankruptcy. An underwriter may also request your motor vehicle records. Excess moving violations or DUIs may raise red flags to decline coverage. This may also extend to your criminal history especially if it includes a felony conviction.
Your MIB Record
It’s a safe assumption a policy worth $1 million will get more scrutiny than one of a lesser amount simply because it represents a greater risk for the insurance company. Insurers rely heavily on the ratings they receive from financial analysts like AM Best or Standard and Poor’s. Part of their assessment of a company includes the amount of risk and claims paid out.
One way insurance companies assess their own risk is through the Medical Information Bureau (MIB). The majority of insurance companies in the United States belong to this cooperative. It acts as an information exchange between members to ensure accuracy in insurance applications. If you’ve applied for insurance, you have a MIB record in its system.
It becomes important for a million dollar life insurance policy if your insurer uses it as part of its criteria for applications. If you’ve been denied coverage by another company, this information is most likely part of your record. This can make getting other insurance more difficult since you’ve been flagged for some kind of risk. An insurer will be reluctant to insure someone for $1 million.
Rest assured you will receive a pre-notice which is required by MIB before an insurance company does a search. Often, insurers spell out the underwriting process, so you’ll know upfront if this will be an issue. And remember you’ll only have a MIB record if you’ve applied for insurance previously. If it’s been longer than seven years, you won’t have a record either.
Do Your Homework Before You Buy
It behooves you to research potential insurance companies carefully, especially with the amount of coverage you’re seeking. Like an insurer will assess their risk, you should make your own assessment about a company before buying. You should begin with its financial stability. Financial analysts like Fitch rate insurance companies and other businesses on their viability.
They consider many factors to determine a rating which offers an expert opinion on an insurance company’s ability to meet its financial obligations and pay out its claims. Most consider an insurer’s stability in adverse economic conditions, so you have some indication of its responsiveness to the market. But you should use this information in addition to other factors.
You should also look at things like the insurer’s reputation for customer service and how it handles claims. Make sure and review the fine print for all the requirements for a million dollar life insurance policy. Some insurance companies use medical and personal histories instead of a medical exam anyway because of the ease of obtaining these data anyway.
Purchasing a million dollar no exam term life insurance policy may eliminate the need for a physical, but it may require other data which may affect your chances of being accepted. Therefore, it pays to know what information an underwriter will use to base an assessment of your application. The time you take before signing is time well spent.